Verkhovna Rada Adopts Law on Tax Increase
On 10 October 2024, the Verkhovna Rada of Ukraine adopted in the second reading Draft Law No. 11416-d, which provides for a number of tax changes, some of which enter into force retroactively – from 1 October 2024.
The main innovations relate, in particular, to an increase in the military tax rate and the introduction of new rules for individuals, small businesses and financial institutions.
The Law provides for the following key changes:
Military Fee Increase
Starting from 1 October 2024, the military duty rate for employees, including those working in the special Diia.City regime, will increase from 1.5% to 5%.
The only exception is made for law enforcement officers, including members of the Armed Forces, the Security Service of Ukraine, the National Guard and other services, for whom the rate will remain at 1.5%.
Changes for Entrepreneurs on Simplified Taxation System
Starting from 1 January 2025, individual entrepreneurs of the first, second and fourth groups will have to pay 10% of the minimum wage as a military fee, which is currently UAH 800.
Individual entrepreneurs and legal entities of the third group will pay a military fee of 1% of their income.
Income Tax for Financial Institutions
Starting in 2024, banks will pay income tax at an increased rate of 50%.
For non-bank institutions, except for insurance companies, the rate will increase from 18% to 25% from 1 January 2025.
Changes in Agricultural Sector
The minimum land tax will now be UAH 700 and UAH 1400 per hectare. In addition, the minimum tax liability for arable land has been increased by 14% and the corresponding minimum liability amount is set at UAH 1400 per hectare.
The law also provides for the abolition of the simplified taxation system for Group IV in case of arrears of the minimum tax liability for more than 2 quarters.
New Minimum Prices for Alcohol
For grape wines and other wine products, the minimum wholesale and retail prices for certain types of alcoholic beverages approved by the Resolution of the Cabinet of Ministers of Ukraine No. 957 dated 30 October 2008, are to be increased by 50 percent.
Other Changes
Another important innovation is the exemption from taxation of income received under the National Cashback Program, as well as foreign aid for citizens who are temporarily protected abroad.
A new procedure for reporting personal income tax, military duty and unified social contribution (USC) has been introduced – monthly instead of quarterly – starting from 1 January 2025.
The Law has now been sent to the President of Ukraine for signature.
Verkhovna Rada Supported Draft Law on Improving the Regulation of Food Additives
On 10 October 2024, the Verkhovna Rada of Ukraine adopted in the first reading the Draft Law No. 11389 “On Amendments to Certain Laws of Ukraine on Improving the Regulation of the Production and Circulation of Food Additives”.
The Draft Law provides for several important changes in the regulation of the production and circulation of food products. In particular, it is proposed to bring the term “dietary supplement” in line with European legislation by replacing it with “food supplement” in accordance with Directive 2002/46/EC of the European Parliament and of the Council.
The document also establishes the procedure for submitting and requirements for notification of the introduction of food additives into circulation and the obligation of the State Service of Ukraine on Food Safety and Consumer Protection to maintain a list of such notifications. The list will be available on the official website of the authority.
In addition, the Draft Law will give the State Service of Ukraine on Food Safety and Consumer Protection the authority to approve
the procedure and methodology for assessing the impact on human health of vitamins, minerals and other substances and their maximum permissible doses in food supplements, a list of vitamins, minerals and other substances and their permissible dosages allowed for use in food supplements.
The Law also increases liability for the production and sale of food supplements that do not comply with the established standards.
In particular, liability is established for:
- violation by the market operator of the requirements for providing information to consumers on food supplements;
- offering for sale or selling food supplements whose labelling does not comply with the law;
- violation of requirements for the content and/or quantity of ingredients and/or substances in food supplements;
- production of food supplements containing substances and/or ingredients that are not included in the list of vitamins, minerals and other substances and their maximum permissible doses allowed for use in food supplements;
- offer for sale or sale of food supplements containing substances and/or ingredients that are not on the list of vitamins, minerals and other substances and their maximum permissible doses permitted for use in food supplements.
In addition, in case of violation of special requirements for food supplements, the state inspector shall decide to temporarily suspend the production and/or circulation of food and/or feed, regardless of whether such production and/or circulation poses a threat to human life and/or health.
The Draft Law is expected to be prepared for the second reading in the Parliament.
VR Supports Draft Law to Change the System of Business Inspections
On 8 October 2024, the Verkhovna Rada of Ukraine adopted in the first reading the government Draft Law No. 5837 “On the Basic Principles of State Supervision (Control)”, which aims to significantly reform the business inspection system.
The main proposals of the Draft Law are follows:
Voluntary Insurance of Entrepreneurs
A greater frequency of supervision of medium and low-risk entities may be established for the duration of the civil liability insurance contract for damage to the environment, life, health and property of third parties.
Preventive Audit
Entrepreneurs will be able to conduct an audit of their activities as a precautionary measure.
Based on its results, the identified violations can be corrected without imposing penalties.
A positive audit conclusion will reduce the frequency of scheduled inspections: for high-risk companies, the period between inspections will increase from 1 to 1.5 years, for medium risk – from 3 to 4.5 years, and for low risk – from 5 to 7.5 years.
Institute of Public Councils
The central executive authorities, their territorial bodies, state collegial bodies, local state administrations and local self-government bodies authorised to control the activities of business entities will establish state supervision (control) councils with the participation of business representatives, which will help to consider complaints from entrepreneurs more objectively and reduce the burden on the courts through pre-trial dispute resolution.
Inspection Portal and e-Cabinets
The portal will be improved for electronic interaction between entrepreneurs and regulatory authorities.
Entrepreneurs will be able to file complaints and refuse inspections through an electronic system, which will facilitate communication and reduce time and resources.
The Law aims to regulate the procedure for conducting scheduled inspections of businesses by the relevant regulatory authorities, including the State Tax Service, the State Labor Service, the State Consumer Service, the State Emergency Service of Ukraine, and others.
The Draft Law is expected to be prepared for the second reading in the Parliament.
New Tax Reporting Forms Enter Into Force on 1 October
On 1 October 2024, the Order of the Ministry of Finance of Ukraine dated 9 August 2024 No. 400 “On Amendments to Certain Regulatory Acts of the Ministry of Finance of Ukraine” (as amended by the Order of the Ministry of Finance of Ukraine dated 28 August 2024 No. 418) entered into force in Ukraine.
Among the innovations:
- the new version of the tax reporting forms for value added tax (tax declaration, clarifying calculation, calculation) was set out in a new version and the Procedure for filling in and submitting these forms, approved by Order of the Ministry of Finance No. 21 in 2016, was amended;
- a new version of the form of the tax invoice and the Procedure for filling it in, approved by the Order of the Ministry of Finance No. 1307 of 2015, was set out.
In accordance with the provisions of the Tax Code, the new forms of declarations and calculations will be used for reporting purposes starting from the next tax period after their publication.
Starting from 1 October 2024, VAT payers will start using the new forms of tax invoices and adjustment calculations to be registered in the Unified Register of Tax Invoices.
Starting from 1 November 2024, new forms for filing VAT returns for October 2024 will be introduced.
Also, starting from 1 November, taxpayers will have to submit corrective calculations of tax liabilities in a new form to correct errors identified by themselves.
e-Excise System to Control the Circulation of Alcohol and Tobacco will be Launch in Ukraine
On 4 October 2024, the Ministry of Digital Transformation announced that the E-excise system will soon be launched in Ukraine, which will fully control the circulation of alcoholic beverages and tobacco products, as the Cabinet of Ministers has already adopted the relevant regulations on the system’s operation.
The system will replace traditional paper excise stamps with electronic ones with unique codes that can be checked using the Diia mobile app. This will allow users to:
- check the legality and origin of goods;
- submit complaints in case of violations.
The documents adopted by the Government define the interaction of E-excise with business and government agencies, integration with other registers, as well as the procedure for issuing electronic excise documents (EEDs) and assigning unique group identifiers (UGIs) for excisable goods.
EU Council Adopts New Sanctions Mechanism to Counter Russia’s Destabilizing Actions
On 8 October 2024, the Council of the European Union adopted a new sanctions mechanism in response to Russia’s destabilizing activities abroad, the EU Council’s press service reported.
The new mechanism allows the EU to impose sanctions on individuals and legal entities involved in policies and actions of the Russian government that threaten the fundamental values of the EU, the security, independence and integrity of its member states, and undermine the stability of international organizations and third countries.
The sanctions are aimed at countering various hybrid threats, including:
- interference with electoral processes and democratic institutions;
- threats or sabotage of economic activity and critical infrastructure;
- spreading disinformation and manipulating foreign information;
- malicious cyber activities;
- using migrants as a tool for destabilization.
Under the new mechanism, the assets of the sanctioned persons will be frozen, and EU citizens and companies will be prohibited from providing them with financial resources.
In addition, the sanctioned individuals will be banned from entering the EU, including transit through the territory of the Union.
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